Case Study: How we saved 13 years on their home loan and kept their repayments the same.
- TheLendingTeam
- May 28
- 2 min read
Your home loan structure needs to be reviewed on a regular basis. As the market, your personal circumstances and goals change your structure will should adapt with you.
Our clients fixed term rate was up for renewal in April 2025 and for context their initial loan structure was as follows:
(1) $175,000 fixed rate of 6.75% expiring in April, loan term remaining 23 years
(2) Offset Loan $10,000 floating at 6.75%
(3) $170,000 fixed until 2026, loan term remaining 23 years – No changes made
Due to the decreasing interest rate market, when the fixed rate ended in April they would be refixing at a lower interest rate. In this case after discussing their personal circumstances and goals with their adviser, they decided to refix for 1 year at 5.15%.
However their goal was to keep their overall home loan repayments the same $1,400 per fortnight, repay their debt faster and keep access to their cash savings for unexpected costs.
After workshopping different strategies with their adviser, we completed a restructure utilising a different home loan product known as a revolving credit facility:
(1) $165,000 fixed at 5.15%, loan term reduced to 10 years
(2) $20,000 revolving credit facility floating at 6.70%
There are risks and benefits to a utilising a revolving credit facility which our clients were comfortable with as they had used this product before and discussed risks with their adviser. Once our clients transferred $20,000 of their cash savings into the facility they would not be charged interest on this portion of their home loan, additionally with their facility there is no repayments, and they would still be able to access the funds for unexpected costs.
As their cash flow had increased since they didn’t have repayments on the $20,000 revolving credit facility, we reduced the loan term on the $165,000 term loan to 10 years, saving 13 years on their home loan. This aligned with the client’s overall fortnightly budget of $1,400.
This is a reminder that the loan structure needs to be reviewed on a regular basis. Their initial structure was not wrong and it was suitable for their goals when we reviewed the structure a year prior. However, as the market and personal circumstances changed the loan structure also needs to adapt. Building your long-term relationship with your financial adviser is key to ensure you’re getting specialised financial advice on a consistent basis.
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